Softbank, E*Trade buy 34% in Investsmart

Softbank Asia Infrastructure Fund LP (SAIF) and E*Trade Financial have together acquired a 34 per cent stake in domestic broking firm IL&FS Investsmart from promoters IL&FS and ORIX Corporation of Japan for a total investment of Rs 64 crore.

IL&FS, the infrastructure lending firm, and Japan's Orix Corporation own 78 per cent and 22 per cent of Investsmart, respectively, and each will sell a proportionate share to the two new investors

After the placement, IL&FS' holding in Investsmart will come down to 51.33 per cent, while ORIX will continue to hold 14.67 per cent in the broking firm. E*Trade Financial is routing its investsment through its wholly owned subsidiary, E*Trade Mauritius.

Softbank  Asia Infrastructure Fund is a strategic joint venture between Softbank Corporation of the US and Cisco Corporation, and was set up in 2001 to invest in information technology, media and telecom related companies in the Asia-Pacific region.

Apart from E*trade Financial, Softbank's investsments include Yahoo!, UTStarcom. Sify and Intelligroup.

Announcing the deal at a media conference in Mumbai on Wednesday, Hemang Raja, managing director and CEO, IL&FS Investsmart said: "Its a matter of pride for us to get Softbank and E*Trade to become the equity owners in the company. E*Trade will get a representation on the IL&FS Investsmart board, which shows the commitment of the new partners."

IL&FS Investsmart which was to raise equity capital through a public offering is still keen to go ahead with the IPO.

"Though we don't need cash at this point of time  pursuant to the strategic investsment by partners, we plan to go ahead with the initial offering. However, the IPO will be re-structured."

All the four shareholders have agreed in-principle to go ahead with the public offering which will be in the form of a fresh offering, Raja said, adding that the IL&FS board will decide on the timing of the issue in the net one and a half months.